“AI is not taking your job—someone using AI more effectively will.” – Ginni Rometty, former CEO, IBM
Tech layoffs driven by economics, not AI
Despite the popular narrative that artificial intelligence is slashing jobs, industry analysts say the real culprits behind the global tech layoffs in 2025 are cost pressures, weak demand, and investor expectations. Over 138,000 layoffs have already occurred this year, with projections exceeding 243,000 by December, according to Adecco India.
The weight of macroeconomic forces
Experts highlight that the majority of job cuts around 60 to 70 percent stem from macroeconomic challenges rather than automation. The global IT sector continues to struggle with subdued demand and tight capital conditions following the pandemic’s over-hiring spree. Most AI deployments are still in early or pilot stages, limiting their direct impact on employment.
Pricing and profit pressures
Rajesh Ranjan from the Everest Group points out that weak discretionary spending and tariff uncertainties have added to pricing pressures, especially in Indian IT firms. Companies are recalibrating their cost structures to stay competitive while navigating high operational costs and cautious client budgets.
Labour cost optimisation
Tech firms are increasingly turning to outsourcing and offshoring to manage labour expenses. While AI often gets cited as a reason for layoffs, many experts argue it serves more as a narrative tool than a primary cause. Instead, firms are prioritising strategic restructuring to prepare for recovery as economic conditions stabilise.
The evolving AI role
AI’s impact on employment remains limited but growing. As organisations experiment with automation and digital agents, roles in innovation, data management, and security are seeing renewed demand. Analysts expect tech hiring to gradually rebound once macroeconomic headwinds ease.
Summary
The ongoing wave of tech layoffs in 2025 is driven mainly by global cost pressures and weak demand, not AI adoption. While AI plays a small role, most job cuts are strategic adjustments. As conditions improve, firms are expected to resume selective hiring, particularly in innovation and security domains.Food for thought
Are companies blaming AI for layoffs to deflect attention from deeper structural and economic flaws?AI concept to learn: AI adoption
AI adoption refers to how organisations integrate artificial intelligence into operations, decision-making, or products. Early adoption often begins with pilot projects to test efficiency and scalability before expanding into broader business processes.
[The Research Team at Billion Hopes brings to you latest AI news and developments in a useful format. Feedback welcome!]
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